9911796707
TMI Blog2000 (3) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner entered into an agreement for the deemed payment of deferred sales tax on September 8, 1997. We will refer to the terms of the agreement while considering the issues involved in the case. Suffice it to say that the deferral of sales tax was available only on the increased volume of production/sales. For the purpose of finding out the increased volume of production, the base figure was agreed to be the highest volume of production/sale in the petitioner's unit during the last three years. Accordingly, the highest production/sale was taken as 1041.27 metric tonnes and Rs. 822.61 lakhs being the figures available for the year 1995-96. In turn, the agreement entered into between the parties incorporated the following figures. Production in tonnes ... 1,041.27 M.Ts. Taxable sales turnover ... Rs. 473 lakhs Tax effect ... Rs. 59.14 lakhs Therefore, as per the agreement the petitioners have to go on paying the sales tax up to the level of base volume of production/ sales. In other words, up to the limit of Rs. 59.14 lakhs the petitioner has to pay sales tax and any further tax liability over and above this tax limit was eligible for deferral. While so, the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. In a separate counter-affidavit filed by the second respondent they also contend that the argument that it is enough to show that either of the two conditions, namely, base production volume or base volume is reached the petitioner will be entitled to deferral of sales tax, is not correct. They have not referred to the terms of the agreement since they are not parties to the agreement. They however, agree that as per clause 5.2 of the eligibility certificate an agreement has to be entered into with the Assistant Commissioner, Commercial Taxes. They also refer to G.O. Ms. No. 119/CT & RE Department/dated April 13, 1994, wherein, the Government has clearly explained certain aspects of the eligibility for deferment of sales tax. Class (ii) of the said G.O. is as follows: "(ii) When the actual production in the industry in any financial year exceeds the base production volume, the industry would be eligible for deferral of sales tax for sales made in that year in excess of the base sales volume under Tamil Nadu General Sales Tax Act, which is the highest of the actual annual sales in the last 3 years prior to expansion." 4.. Before looking into the terms and conditions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the industry can avail of the sales tax deferral facility. We will therefore, refer to the terms of the eligibility certificate and the terms of the agreement to find out whether the petitioner can make good the case. Clause 5 of the eligibility certificate contains the conditions required to be specified. Clause 5.1 talks of the deferral period and the year of repayment. Clause 5.2 insists that an agreement should be entered into with the Assistant Commissioner of Commercial Taxes concerned, before availing the facility. Clause 5.3 is important and strong reliance is placed by the petitioner on this clause. We will therefore, extract the said clause and it is as follows: "5.3. The company is eligible for deferral of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the year during the last 3 years. Till reaching the volume of production/sale specified earlier the company would be the highest of the volume of production/sale specified earlier the company would continue to pay tax and any liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction/sales specified earlier the company would continue to pay tax and any liability in excess of the production/sales specified above will be eligible for deferment." In view of the above facts, the base figure for finished product is furnished below: Year Production (Tonnes) TNGST ..... effect taxable turnover Tax effect CST ..... effect taxable turnover Tax effect Total taxable turnover Tax effect 1993-94 29.81 2.07 105.94 9.83 135.75 11.90 1994-95 71.47 5.14 187.38 14.56 258.85 19.70 1995-96 57.38 21.00 416.41 38.14 473.79 59.14 (Rupees in lakhs) (1) For the highest production/sales achieved by the company prior to the proposed expansion/diversification in respect of existing unit, the year 1995-96 is taken as the base figure as below: Production in tonnes: 1041.27 tons Taxable sales turnover: 473.79 lakhs Tax effect: 59.14 lakhs (2) In case of any increase in rate of tax on finished goods, the availing unit should pay tax on the taxable sales turnover fixed as base figure at the appropriate rate. (3) The company has to go on paying the tax to the level of base volume of production/sales and once it reaches this level of Rs. 59.14 lakhs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that in those cases the agreement did not disclose the total taxable turnover and the sale effect during the base period, we are also of the opinion that the subsequent Bench judgment in O.P. Nos. 1347 and 1348 dated November 5, 1999 (Madras Cements Ltd. v. State of Tamil Nadu*) should have precedence. Further, we have to point out that an agreement between the parties cannot be overlooked unless either of the parties take legal steps to modify or alter the agreement in a manner known to law. It is an essential principle of law that the contract between the parties should be taken as it is, unless legally modified. In this view of the *See page 208 supra. matter we do not accept any of the arguments advanced on the side of the petitioner and we accept the stand of the Government that the impugned notice dated September 9, 1999 is valid and is in accordance with law. Consequently, the original petition fails and is dismissed.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 24th day of March, 2000.
Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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